In: Operations Management
Express Auto, an automobile mega- dealership with more than 600 employees that represents 22 brands has received a very discouraging set of survey results. Customer satisfaction scores have fallen for the ninth straight quarter. Customer complaints include:
The table given below describes Express Auto’s current compensation system.
Express Auto Team |
Responsibility of Team |
Current Compensation Method |
1.Sales force |
Persuade buyer to purchase a car. |
Very small salary (minimum wage) with commissions. Commission rate increases with every 20 cars sold per month |
2. Finance office |
Help close the sale; persuade customer to use company finance plan. |
Salary, plus bonus for each $10,000 financed with the company. |
3. Detailing |
Inspect cars delivered from factory, clean and make minor adjustments. |
Piecework paid on the number of cars detailed per day. |
4. Mechanics |
Provide factory warranty service, maintained and repair. |
Small hourly wage, plus bonus based on (1 )number of cars completed per day and (2) finishing each car faster than the standard estimated time o repair. |
5. Receptionist/ phone service personnel. |
Primary liaison between customer and sales force, finances and mechanics. |
Minimum wage. |
What recommendations would you make to improve the compensation system in a way that would likely improve customer satisfaction?
Express Auto Team | Responsibility of Team | Current Compensation Method | modified compensation method |
1.Sales force | Persuade buyer to purchase a car. | Very small salary (minimum wage) with commissions. | Base Salary increase by 15% |
Commission rate increases with every 20 cars sold per month | Commission Rate increases with every 10 cars sold per month | ||
2. Finance office | Help close the sale; persuade customer to use company finance plan. | Salary, plus bonus for each $10,000 financed with the company. | Salary, plus bonus for each $10,000 financed with the company. |
3. Detailing | Inspect cars delivered from factory, clean and make minor adjustments. | Piecework paid on the number of cars detailed per day. | Piecework paid on the number of cars detailed per day. |
4. Mechanics | Provide factory warranty service, maintained and repair. | Small hourly wage, plus bonus based on (1 )number of cars completed per day and (2) finishing each car faster than the standard estimated time o repair. | Small hourly wage, plus bonus based on (1 )number of cars completed per day and (2) finishing each car faster than the standard estimated time o repair. |
5. Receptionist/ phone service personnel. | Primary liaison between customer and sales force, finances and mechanics. | Minimum wage. | minimum wage |